July 6, 2022

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Pension warning: Britons should keep underneath financial savings restrict or face 55% tax cost

Britons can profit from tax aid on their pension financial savings, however solely as much as a sure level. The presence of the Lifetime Allowance (LTA) looms over those that have saved successfully for retirement.

The LTA was initially launched within the 2006/07 tax yr, and was set at a considerably greater stage of £1.5million.

It was then elevated over the subsequent few years, rising as follows:

  • 2006/2007 – £1,500,000
  • 2007/2008 – £1,600,000
  • 2008/2009 – £1,650,000
  • 2009/2010 – £1,750,000
  • 2010/2011 – £1,800,000
  • 2011/2012 – £1,800,000

There’s one other restrict on retirement financial savings generally known as the Annual Allowance.

Because the identify suggests, this caps the tax-free pension financial savings of Britons in a given yr.

It presently stands at £40,000.

As with the LTA, anybody who exceeds the Annual Allowance should report this on their tax return.

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